UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004


(Mark One)
[  X  ]                            FORM 10-Q
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


               For the Quarterly Period Ended September 30, 2003

                                       OR

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
     (  )       OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                         to
                               -----------------------    ----------------------

Commission File Number                  0-13084
                       ---------------------------------------------------------

                             WARRANTECH CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  Delaware                                  13-3178732
--------------------------------------------------------------------------------
    (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                        Identification No.)

      2220 Highway 121, Suite 100, Bedford, TX                         76021
--------------------------------------------------------------------------------
      (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code             (800) 544-9510
                                                   -----------------------------

--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last year)

            Indicate  by check mark  whether  the  registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
Yes      X     No
        ---       ---

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act.) Yes [ ] No [ X ]

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

                    Class                     Outstanding at October 31, 2003
---------------------------------------      --------------------------------
Common stock, par value $.007 per share             15,409,314 shares



                                       1
<PAGE>




                     WARRANTECH CORPORATION AND SUBSIDIARIES


                                    I N D E X


                                                                        Page No.
          PART I - FINANCIAL INFORMATION


 Item 1:  Financial Statements

     Condensed Consolidated Statements of Operations -
            For the Three and Six Months Ended September 30, 2003
             and 2002 (Unaudited)...........................................   3

     Condensed Consolidated Balance Sheets at September 30, 2003
            (Unaudited) and March 31, 2003..................................   4

     Condensed Consolidated Statements of Cash Flows
            For the Three Months Ended September 30, 2003
            and 2002 (Unaudited)............................................   6

     Notes to Condensed Consolidated Financial Statements...................   7

 Item 2:  Management's Discussion and Analysis of
            Financial Condition and Results of Operations ..................  13

 Item 3.  Quantitative and Qualitative Disclosures About Market Risk........  18

 Item 4.  Controls and Procedures...........................................  18



            PART II - OTHER INFORMATION


 Item 1:  Legal Proceedings.................................................  19

 Item 2:  Changes in Securities.............................................  20

 Item 3:  Defaults Upon Senior Securities...................................  20

 Item 4:  Submission of Matters to a Vote of Security Holders...............  20

 Item 5:  Other Information.................................................  20

 Item 6:  Exhibits and Reports on Form 8-K..................................  20

 Signature .................................................................  22



                                       2
<PAGE>

PART I  - FINANCIAL INFORMATION


                Item 1:  Financial Statements

<TABLE>
<CAPTION>
                             WARRANTECH CORPORATION AND SUBSIDIARIES
                         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (Unaudited)

                                                           For the Three Months Ended              For the Six Months Ended
                                                                  September 30,                          September 30,
                                                        ----------------------------------   --------------------------------------
                                                             2003               2002               2003                 2002
                                                        ---------------    ---------------   ------------------   -----------------
<S>                                                        <C>                <C>                 <C>                 <C>
Earned administrative fee (net of amortization of           $9,587,578         $9,938,267          $18,042,935         $18,972,403
  deferred costs)
                                                        ---------------    ---------------   ------------------   -----------------
Costs and expenses
    Service, selling, and general and administrative         8,024,878          7,894,879           15,530,728          15,097,222
    Provision for bad debt expense                             165,000                  -              260,000                   -
    Depreciation and amortization                              892,893          1,021,535            1,820,973           2,044,654
                                                        ---------------    ---------------   ------------------   -----------------
Total costs and expenses                                     9,082,771          8,916,414           17,611,701          17,141,876
                                                        ---------------    ---------------   ------------------   -----------------

Income from operations                                         504,807          1,021,853              431,234           1,830,527
Other income                                                   605,858            336,552              892,726             566,509
                                                        ---------------    ---------------   ------------------   -----------------

Income before provision for income taxes                     1,110,665          1,358,405            1,323,960           2,397,036
Provision for income taxes                                     329,259            467,880              327,259             794,151
                                                        ---------------    ---------------   ------------------   -----------------

Net income                                                    $781,406          $ 890,525            $ 996,701         $ 1,602,885
                                                        ===============    ===============   ==================   =================

Earnings per share:
  Basic                                                          $0.05              $0.06                $0.07               $0.10
                                                        ===============    ===============   ==================   =================
  Diluted                                                        $0.05              $0.06                $0.06               $0.10
                                                        ===============    ===============   ==================   =================

Weighted average number of shares outstanding:
  Basic                                                     15,353,718         15,322,181           15,319,117          15,317,881
                                                        ===============    ===============   ==================   =================
  Diluted                                                   16,179,600         15,430,348           16,143,599          15,398,910
                                                        ===============    ===============   ==================   =================
</TABLE>






     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                  (Unaudited)
                                                   September 30,   March 31,
                                                       2003           2003
                                                  -------------- --------------
ASSETS

Current assets:
   Cash and cash equivalents                         $2,867,612     $5,478,095
   Investments in marketable securities               1,465,088        843,980
   Accounts receivable, (net of allowances of
       $487,966 and $230,064, respectively)          25,772,315     22,008,608
   Loan receivable - Butler Financial Solutions,     11,140,833      8,612,678
Inc.
   Other receivables, net                             6,254,832      5,299,887
   Deferred income taxes                              2,098,171      2,098,171
   Employee receivables                                  55,533         73,833
   Prepaid expenses and other current assets          1,468,208      1,218,392
                                                  -------------- --------------
      Total current assets                           51,122,592     45,633,644
                                                  -------------- --------------

Property and equipment, net                           6,781,705      8,296,313
                                                  -------------- --------------

Other assets:
   Excess of cost over fair value of assets acquired
       (net of accumulated amortization of            1,637,290      1,637,290
        $5,825,405)
   Deferred income taxes                                653,504        800,406
   Deferred direct costs                              6,866,028      9,972,309
   Investments in marketable securities                 974,252      1,355,263
   Restricted cash                                      825,000        825,000
   Split dollar life insurance policies                 877,126        877,126
   Notes receivable                                   6,404,655      5,411,653
   Other assets                                          51,095         47,124
                                                  -------------- --------------
        Total other assets                           18,288,950     20,926,171

                                                  -------------- --------------
                    Total Assets                    $76,193,247    $74,856,128
                                                  ============== ==============





     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>


<TABLE>
<CAPTION>
                     WARRANTECH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                   (Unaudited)
                                                                                  September 31,       March 30,
                                                                                      2003              2003
                                                                                 ---------------  -----------------
             LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                                 <C>                <C>

             Current liabilities:
                  Current maturities of long-term debt and capital lease obligations $  752,308         $  802,070

                  Insurance premiums payable                                         40,475,558         36,070,992
                  Income taxes payable                                                  181,846             81,236
                  Accounts and commissions payable                                    7,673,839          8,118,371
                  Accrued expenses and other current liabilities                      4,069,460          3,534,106
                                                                                 ---------------  -----------------
                     Total current liabilities                                       53,153,011         48,606,775
                                                                                 ---------------  -----------------

             Deferred revenues                                                       10,831,022         15,065,547
             Long-term debt and capital lease obligations                             1,236,842          1,218,670
             Deferred rent payable                                                      375,593            417,720
                                                                                 ---------------  -----------------
                Total liabilities                                                    65,596,468         65,308,712
                                                                                 ---------------  -----------------

             Commitments and contingencies                                                    -                  -

             Stockholders' equity:
                 Preferred stock - $.0007 par value authorized - 15,000,000

                 Shares issued  - none at September 30, 2003 and March 31, 2003               -                  -
                 Common stock - $.007 par value authorized - 30,000,000 Shares
                    issued  - 16,541,324 shares at September 30, 2003 and
                    16,525,324 shares at March 31, 2003                                 115,784            115,714
                 Additional paid-in capital                                          23,767,079         23,760,809
                 Loans to directors and officers                                   (10,604,782)       (10,462,094)
                 Accumulated other comprehensive income (loss), net of taxes           (95,077)          (196,974)
                 Retained earnings                                                    1,601,332            604,631
                                                                                 ---------------  -----------------
                                                                                     14,784,336         13,822,086
                Treasury stock - at cost, 1,187,607 shares at September 30, 2003
                    and 1,249,690 shares at March 31, 2003                          (4,187,557)        (4,274,670)
                                                                                 ---------------  -----------------
                       Total Stockholders' Equity                                    10,596,779          9,547,416
                                                                                 ---------------  -----------------

                                                                                 ---------------  -----------------
                          Total Liabilities and Stockholders' Equity                $76,193,247        $74,856,128
                                                                                 ===============  =================
</TABLE>




     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>


<TABLE>
<CAPTION>
                     WARRANTECH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                     For the Six Months Ended
                                                                          September 30,
                                                              --------------------------------------
                                                                    2003                2002
                                                              ------------------ -------------------
<S>                                                                <C>                 <C>
Cash flows from operating activities:
  Net income                                                         $  996,701        $  1,602,885
                                                              ------------------ -------------------
  Adjustments to reconcile net income to net cash provided by
       operating activities:                                           818,222          (3,652,379)
                                                              -----------------  -------------------
Net cash flows provided by (used in) by operating activities         1,814,923          (2,049,494)
                                                              -----------------  -------------------

Cash flows from investing activities:
   Property and equipment purchased                                  (210,177)            (470,098)
   Purchase of marketable securities                                 (695,000)            (550,000)
   Proceeds from sales of marketable securities                        445,000              450,000
                                                              -----------------  -------------------
Net cash used in investing activities                                (460,177)
                                                                                          (570,098)
                                                              -----------------  -------------------

Cash flows from financing activities:
    Issuance of common stock                                             6,270                2,100
    Purchase treasury stock                                                  -             (106,899)
    Increase in loans and notes receivable                         (3,521,157)            (747,383)
    Repayments, notes and capital leases                             (450,342)            (448,338)
                                                              -----------------  -------------------
Net cash used in financing activities                              (3,965,229)          (1,300,520)
                                                              -----------------  -------------------

Net decrease in cash and cash equivalents                          (2,610,483)          (3,920,112)
Cash and cash equivalents at beginning of period                     5,478,095            7,033,448
                                                              -----------------  -------------------
Cash and cash equivalents at end of period                         $ 2,867,612         $  3,113,336
                                                              -----------------  -------------------

Supplemental cash flow information:
Cash payments for:
   Interest                                                         $  148,358          $    79,492
   Income taxes                                                     $   48,650        $  (1,247,975)
                                                              -----------------  -------------------

Non-cash investing and financing activities:
    Property and equipment financed through capital leases          $  427,073          $    69,873
    Increase in loans to officers and directors                     $ (142,688)         $  (156,312)
    Issuance of treasury stock                                      $   87,113          $   105,745
</TABLE>






     See accompanying notes to condensed consolidated financial statements.



                                       6
<PAGE>



                     WARRANTECH CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2003
                                   (UNAUDITED)

     1.  THE COMPANY

       Warrantech,   through  its  wholly   owned   subsidiaries,   markets  and
       administers service contracts, extended warranties and replacement plans.
       The   Company  is  a  third   party   administrator   for  a  variety  of
       dealer/clients  in  selected   industries  and  offers  call  center  and
       technical  computer  services.  The  Company  assists  dealer/clients  in
       obtaining  insurance  policies  from highly rated  independent  insurance
       companies for all contracts and programs  offered.  The insurance company
       is then  responsible  for the cost of  repairs  or  replacements  for the
       contracts administered by Warrantech.

       The Company's  service contract  programs benefit  consumers by providing
       them with  expanded  and/or  extended  product  coverage  for a specified
       period  of  time  (and/or   mileage  in  the  case  of  automobiles   and
       recreational  vehicles),  similar to that provided by manufacturers under
       the terms of their product  warranties.  Coverage  generally provides for
       the repair or replacement of the product,  or a component thereof, in the
       event of its failure. The Company's service contract programs benefit the
       dealer/clients by providing enhanced value to the goods and services they
       offer and by providing them with the  opportunity  for increased  revenue
       and  income  without  the  costs and  responsibilities  of  operating  an
       extended warranty program.

       The service  contracts,  extended  warranties and  replacement  contracts
       generally  have terms ranging from three (3) to one hundred  twenty (120)
       months.  Since the Company acts solely as a third party  administrator on
       behalf of the dealer/clients and insurance companies,  the actual repairs
       and/or  replacements  required  under the  agreements  are  performed  by
       independent third party authorized repair facilities or dealers. The cost
       of repairs is generally  paid for by the insurance  companies  which have
       the  ultimate  responsibility  for  the  claims  or by  Butler  Financial
       Solutions, LLC ("Butler"),  if Reliance Insurance Company ("Reliance") or
       the  Company  is  the  obligor.  The  insurance  policy  indemnifies  the
       dealer/clients  against losses resulting from service contract claims and
       protects consumers by ensuring their claims will be paid.

2.       BASIS OF PRESENTATION

       The accompanying  consolidated financial statements have been prepared by
       management and are unaudited.  These interim  financial  statements  have
       been prepared on the basis of accounting principles generally accepted in
       the United States of America ("GAAP") for interim  financial  information
       and with the  instructions to Form 10-Q and Article 10 of Regulation S-X.
       Accordingly,  they do not include all information and footnotes  required
       by  accounting  principles  generally  accepted  in the United  States of
       America for complete financial statements.  In the opinion of management,
       all  adjustments  (consisting of normal  recurring  accruals)  considered
       necessary for a fair presentation of the financial position and operating
       results  of the  Company  for the  interim  period  have  been  included.
       Operating  results for the three months ended  September 30, 2003 are not
       necessarily indicative of the results that may be expected for the fiscal
       year  ending  March  31,  2004.  For  further  information,  refer to the
       consolidated  financial  statements and footnotes thereto included in the
       Company's Annual Report on Form 10-K for the year ended March 31, 2003.

3.        RESTATEMENT

       The Company's  financial  statements  for the three months and six months
        ended  September  30,  2002,  have been  restated to reflect a change in
        accounting  treatment in calculating net earned  administrative  fees as
        more fully described in the Company's  Annual Report on Form 10K for the
        year ended March 31, 2003. For certain contracts, the Company previously
        had deferred a portion of the revenue and would  recognize such deferred
        revenue at the  cancellation or end of the contract's  term. The Company
        is now recognizing this revenue over the life of the contract's term.




                                       7
<PAGE>



       The effect of this  restatement for the three months and six months ended
September 30, 2002 is as follows:

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                            SEPTEMBER 30, 2002          SEPTEMBER 30, 2002
                                                                         ------------------------------------------------------
                                                                              AS                         AS
                                                                          PREVIOUSLY                 PREVIOUSLY
                                                                           REPORTED   AS RESTATED     REPORTED    AS RESTATED
                                                                         -------------------------  ---------------------------


<S>                                                                        <C>         <C>           <C>           <C>
           Statement of operations:
           Earned administrative fee (net of amortization of               $9,934,415  $9,938,267    $18,964,701   $18,972,403
           deferred costs)
           Income from operations                                           1,018,001   1,021,853      1,822,285     1,830,527
           Income before provision for income taxes                         1,354,553   1,358,405      2,389,334     2,397,036
           Provision for income taxes                                         466,507     467,880        791,407       794,151
           Net income                                                       $ 888,046   $ 890,525     $1,597,927    $1,602,885


           Earnings per share:
           Basic                                                                $0.06       $0.06          $0.10         $0.10
                                                                                =====       =====          =====         =====
           Diluted                                                              $0.06       $0.06          $0.10         $0.10
                                                                                =====       =====          =====         =====
</TABLE>


   4. NOTES RECEIVABLE

       Butler  serves as the ultimate  obligor under  predominantly  all service
       contracts  administered by the Company in exchange for a fee. Some of the
       service  contracts  under  which  Butler is the obligor  were  insured by
       Reliance and the  liquidation  of Reliance has  eliminated  the insurance
       coverage to Butler.

       To pay these  Reliance  obligations,  the  primary  funding  to Butler is
       provided  by a special  surcharge,  payable  on certain  vehicle  service
       contracts  administered  by the Company sold after November 19, 2001. The
       surcharge  is payable by agents  through  whom  Reliance-insured  service
       contracts were sold.

       Any shortfall  between the claims  obligations being paid and the special
       surcharge,  Warrantech is assisting  Butler by providing loans to Butler.
       Warrantech  Automotive  made an  initial  $1  million  loan to Butler and
       further loans through September 30, 2003 of $16,568,735.

       Additionally,  it will  continue  to  assist  Butler  in  addressing  its
       potential  obligations under the service contracts  previously insured by
       Reliance  for which  Butler  is, or the  dealer or  Warrantech  was,  the
       obligor, by providing further loans, as necessary, for claims obligations
       in excess of  Butler's  surcharge  revenues.  Subject to the terms of the
       agreement  between the Company and Butler,  the Company has and will make
       further loans to Butler, as necessary,  for claims  obligations in excess
       of Butler's surcharge revenues.  All of Warrantech's loans to Butler bear
       interest at the rate of prime plus 2% per annum and will begin to be paid
       down once Butler's fee revenues exceed the claims obligations.

       Through  September 30, 2003,  Warrantech  has loaned Butler  $17,568,735.
       RWC, which is not part of the Reliance  liquidation,  is obligated to pay
       Butler  $11,140,833 of that amount. The Company expects Butler to collect
       the  $11,140,833  from RWC during the third  quarter of fiscal  2004 and,
       simultaneously,  the Company will  collect  this amount from Butler.  The
       portion of the Butler  receivables  for which RWC is legally  responsible
       for payment is reflected as "Loan Receivable" on the Consolidated Balance
       Sheet.  The remaining  amount  representing  the loans due from Butler of
       $6,427,902 at September 30, 2003, is classified as "Notes  Receivable" on
       the Consolidated Balance Sheet.





                                       8
<PAGE>



       The  following  table sets forth the carrying  amounts and fair values of
       the Company's notes and other receivables at September 30, 2003.

<TABLE>
<CAPTION>
                                  2004       2005        2006       2007       2008   THEREAFTER     TOTAL      FAIR VALUE
                                  ----       ----        ----       ----       ----   ----------     -----      ----------

<S>                           <C>          <C>         <C>        <C>           <C>        <C>    <C>          <C>
Notes Receivable - Butler
      Equals 2% above prime         --         --      2,563,129  $3,864,77      --         --     $6,427,902   $6,427,902
Loan Receivable - Butler;
      Equals 2% above prime   $11,140,833      --          --         --         --         --    $11,140,833   11,140,833
Other Receivable -
      0%  interest             $6,254,832      --          --         --         --         --    $ 6,254,832   $6,254,832
</TABLE>



5.   COMPREHENSIVE INCOME

     The components of comprehensive income are as follows:

<TABLE>
<CAPTION>
                                                   For the Three Months Ended           For the Six Months Ended
                                                         September 30,                        September 30,
                                              -------------------------------------   ------------------------------
                                                   2003             2002                  2003            2002
                                              ---------------   -------------------   -------------   --------------
<S>                                                <C>             <C>                  <C>             <C>
Net income                                          $781,406        $890,525             $ 996,701       $1,602,885
Other Comprehensive Income, net of tax:
   Unrealized gain on investments                    (6,307)          11,789               (9,749)           30,209
   Foreign currency translation adjustments           88,610       (111,902)               111,646        (119,008)
                                              ---------------   -------------         -------------   --------------
Comprehensive Income                                $863,709        $790,412            $1,098,598       $1,514,086
                                              ===============   =============         =============   ==============

Comprehensive income per share                         $0.06           $0.05                 $0.07            $0.10
                                              ===============   =============         =============   ==============
</TABLE>


The components of accumulated  comprehensive income, net of related tax, for the
periods ended September 30, 2003 and March 31, 2003, are as follows:

                                              September 30,      March 31,
                                                   2003             2003
                                              ---------------   -------------
Unrealized gain on investments                    $   8,297      $   18,046
Accumulated translation adjustments                (103,374)       (215,020)
                                              ---------------   -------------
Accumulated other comprehensive income            $ (95,077)     $ (196,974)
                                              ===============   =============


6.      EARNINGS PER SHARE

        The computations of earnings per share are as follows:

<TABLE>
<CAPTION>
                                                      For the Three Months Ended           For the Six Months Ended
                                                             September 30,                        September,
                                                   ----------------------------------    -----------------------------
                                                        2003               2002             2003             2002
                                                   ----------------   ---------------    ------------    -------------
<S>                                                     <C>               <C>             <C>              <C>
Numerator:
   Net income applicable to common stock                  $781,406          $890,525        $996,701       $1,602,885
                                                   ================   ===============    ============    =============
Denominator:
    Average outstanding shares used in the
     computation of per share earnings:
       Common Stock issued-Basic shares                 15,353,718        15,322,181      15,319,117       15,317,881
       Stock Options (treasury method)                     825,882           108,167         824,482           81,029
                                                   ----------------   ---------------    ------------    -------------
       Diluted shares                                   16,179,600        15,430,348      16,143,599       15,398,910
                                                   ================   ===============    ============    =============
Earnings Per Common Share:
   Basic                                                     $0.05             $0.06           $0.07            $0.10
                                                   ================   ===============    ============    =============
   Diluted                                                   $0.05             $0.06           $0.06            $0.10
                                                   ================   ===============    ============    =============
</TABLE>

                                       9
<PAGE>


     7. STOCK OPTION PLAN

     In  December  2002,  the FASB  issued  Statement  of  Financial  Accounting
     Standards No. 148,  "Accounting for  Stock-Based  Compensation - Transition
     and  Disclosure,  an Amendment of FASB  Statement  No. 123" (SFAS No. 148).
     SFAS No. 148  provides  alternative  methods of  transition  for  companies
     making a voluntary  change to fair  value-based  accounting for stock-based
     employee  compensation.  The  Company  continues  to account  for its stock
     option  plan  under  the  intrinsic   value   recognition  and  measurement
     principles  of  APB  Opinion  No.  25,  "Accounting  for  Stock  Issued  to
     Employees,"  and related  Interpretations.  Effective  for interim  periods
     beginning after December 15, 2002, SFAS No. 148 also requires disclosure of
     pro-forma  results on a  quarterly  basis as if the Company had applied the
     fair value recognition provisions of SFAS No. 123.

     As the exercise price of all options granted under the plan was equal to or
     above the market price of the underlying common stock on the grant date, no
     stock-based  employee   compensation  is  recognized  in  net  income.  The
     following table illustrates the effect on net income and earnings per share
     if the company had applied the fair value  recognition  provisions  of SFAS
     No. 123, as amended,  to options  granted  under the stock option plans and
     rights to acquire stock granted  under the  company's  Stock  Participation
     Plan,  collectively  called  "options."  For  purposes  of  this  pro-forma
     disclosure,  the value of the options is  estimated  using a  Black-Scholes
     option  pricing  model and  amortized  ratably to expense over the options'
     vesting  periods.  Because the estimated value is determined as of the date
     of grant,  the actual  value  ultimately  realized by the  employee  may be
     significantly different.

<TABLE>
<CAPTION>
                                           FOR THE THREE MONTHS ENDED        FOR THE SIX MONTHS ENDED
                                                  SEPTEMBER 30,                   SEPTEMBER 30,
                                        ---------------------------------------------------------------
                                             2003               2002            2003            2002
                                        ---------------    ---------------  --------------  -------------

<S>                                         <C>                <C>             <C>            <C>
Net income as reported                        $781,406           $890,525        $996,701     $1,602,885
Net income pro forma                          $758,906           $874,238        $954,522     $1,570,402
Shares - Basic                              15,353,718         15,322,181      15,319,117     15,317,881
Basic earnings per share as reported             $0.05              $0.06           $0.07          $0.10
Basic earnings per share pro forma               $0.05              $0.06           $0.06          $0.10
</TABLE>






       The fair value of Warrantech  stock options used to compute pro forma net
       income and earnings per share disclosures is the estimated value at grant
       date using the  Black-Scholes  option-pricing  model  with the  following
       weighted  average  assumptions  for  the  three  months  and  year  ended
       September 30, 2003 and 2002, respectively: expected dividend yield of 0%;
       expected  volatility  of 30% - 50%; a risk free  interest  rate of 4.0% -
       5.0%; and expected option life of 3 to 10 years.

       Presented  below is a summary of the  status of the stock  options in the
       plan and the related  transactions for the six months ended September 30,
       2003 and 2002.

<TABLE>
<CAPTION>

                                                     2003                   2002
                                             ---------------------------------------------
                                                         WEIGHTED               WEIGHTED
                                                          AVERAGE               AVERAGE
                                                         EXERCISE               EXERCISE
                                               SHARES      PRICE      SHARES     PRICE
                                             ---------------------------------------------
<S>                                            <C>           <C>     <C>            <C>
Options outstanding at beginning of the       1,306, 380     $1.10   1,416,283      $1.54
  period
Granted                                          180,000      2.18     215,238       0.42
Canceled/Surrendered                                   -         -     (5,000)     (0.42)
Exercised                                              -         -           -          -
Forfeited                                              -         -           -          -
                                             ---------------------------------------------
Options outstanding at end of period           1,486,380     $1.93   1,581,521      $1.31
                                             =============================================

                                             ---------------------------------------------
Options exercisable at end of period             637,097   $1.3654     610,111      $1.21
                                             =============================================
</TABLE>


       The  weighted  average  fair  value of stock  options  at date of  grant,
       calculated using the Black-Scholes  option-pricing  model, granted during
       the six months ended  September 30, 2003 and 2002 was is $0.54 and $0.48,
       respectively.


                                       10
<PAGE>

       The Company may issue options to purchase the  Company's  common stock to
       officers,  non-employees,  non-employee  directors  or  others as part of
       settlements  in disputes  and/or  incentives to perform  services for the
       Company.  The Company  accounts for stock  options  issued to vendors and
       non-employees   of  the  Company  under  SFAS  No.  123  "Accounting  for
       Stock-based  Compensation."  The  fair  value  of each  option  grant  is
       estimated  on the date of grant  using the  Black-Scholes  option-pricing
       model is charged to operations  utilizing  weighted  average  assumptions
       identical to those used for options granted to employees.

       The  following  table  summarizes  the status of all  Warrantech's  stock
       options outstanding and exercisable at September 30, 2003.

<TABLE>
<CAPTION>
                                            STOCK OPTIONS                 STOCK OPTIONS
                                             OUTSTANDING                   EXERCISABLE

                               ----------------------------------   ---------------------------
                                                       WEIGHTED                      WEIGHTED
                                                       AVERAGE                       AVERAGE
                                                       EXERCISE                      EXERCISE
RANGE OF EXERCISE PRICES           SHARES               PRICE          SHARES         PRICE
-----------------------------  --------------        ------------   ------------   ------------
<S>                               <C>                   <C>          <C>              <C>
$0.67 to $0.87                       899,082               $0.74        356,666          $0.71
$1.26 to $1.595                      616,008               $1.33        391,186          $1.33
$2.00                              4,650,000               $2.00      3,000,000          $2.00
$3.25 to $3.375                      101,290               $3.35        101,290          $3.27
                               --------------        ------------   ------------   ------------
Total at September 30, 2003        6,266,380               $1.97      3,849,142          $1.83
                               ==============        ============   ============   ============
</TABLE>

     8.   SEGMENTS

       The  Company  operates  in three  major  business  segments:  Automotive,
       Consumer Products and  International.  The Automotive segment markets and
       administers   extended   warranties   on   automobiles,   light   trucks,
       motorcycles,  recreational vehicles and automotive components,  which are
       sold principally by franchised and independent  automobile and motorcycle
       dealers, leasing companies,  repair facilities,  retail stores, financial
       institutions and other specialty marketers. The Consumer Products segment
       develops,   markets  and  administers  extended  warranties  and  product
       replacement  plans  on  household   appliances,   consumer   electronics,
       televisions,   computers,   home  office  equipment,   jewelry,   musical
       instruments and homes and which are sold principally  through  retailers,
       distributors,  manufacturers,  utility companies,  financial institutions
       and other specialty  marketers.  Warrantech also markets these warranties
       and  plans   directly  to  the   ultimate   consumer  on  behalf  of  the
       retailer/dealer  and/or the manufacturer through telemarketing and direct
       mail  campaigns.   The  International  segment  markets  and  administers
       predominately  the same  products  and  services  as the  other  business
       segments. The International segment is currently operating in Central and
       South  America,   Puerto  Rico  and  the  Caribbean.   "Other"   includes
       intersegment eliminations of revenues and receivables and net unallocated
       corporate expenses.

<TABLE>
<CAPTION>
                                                   CONSUMER                    REPORTABLE
   SIX MONTHS ENDED               AUTOMOTIVE       PRODUCTS    INTERNATIONAL    SEGMENTS         OTHER          TOTAL
   SEPTEMBER 30, 2003

<S>                                  <C>            <C>             <C>          <C>            <C>             <C>
   Earned administrative fee         $6,900,538     $8,026,927    $2,962,087     $17,889,552      $153,383     $18,042,935
   Income (loss) from                 2,456,214      1,029,548       962,724       4,448,486   (3,555,760)         892,726
   operations
   Pretax income (loss)               (595,099)        188,793       962,505         556,199     (228,940)         327,259
   Net interest income                (145,611)        (8,748)         6,288       (148,071)       677,516         529,445
   (expense)
   Depreciation/amortization            192,893        804,255        43,642       1,040,790       780,183       1,820,973
   Total assets                      43,999,663     19,771,192     4,221,632      67,992,487     8,200,760      76,193,247

   SEPTEMBER 30, 2002
   Earned administrative fee        $10,558,403     $7,103,063    $1,477,090     $19,138,556     (166,153)     $18,972,403
   Income (loss) from                 6,650,796        520,450        20,067       7,191,313   (5,360,786)       1,830,527
   operations
   Pretax income (loss)               2,719,379      (766,715)        16,238       1,968,902       428,134       2,397,036
   Net interest income                   12,644          3,318         6,841          22,803       350,113         372,916
   Depreciation/amortization            194,736        876,888        42,759       1,114,383       930,271       2,044,654
   Total assets                      41,645,025     24,383,023     3,220,398      69,248,446     5,607,682      74,856,128
</TABLE>


                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                   CONSUMER                    REPORTABLE
   QUARTER  ENDED                 AUTOMOTIVE       PRODUCTS    INTERNATIONAL   SEGMENTS         OTHER          TOTAL
   SEPTEMBER 30, 2003
<S>                                  <C>            <C>             <C>          <C>            <C>             <C>
   Earned administrative fee         $3,589,071     $4,143,072    $1,881,660      $9,613,803     ($26,225)      $9,587,578
   Profit (loss) from                 1,381,638        562,755       702,291       2,646,684   (2,141,877)         504,807
   operations
   Pretax income (loss)               (335,921)        182,418       698,673         545,170       565,495       1,110,665
   Net interest income                 (84,920)        (1,717)         4,382        (82,255)       494,514         412,259
   Depreciation/amortization             97,187        399,421        22,201         518,809       374,084         892,893

   SEPTEMBER 30, 2002
   EARNED ADMINISTRATIVE FEE         $5,549,271     $3,741,217      $760,817     $10,051,305    $ (113,038)     $9,938,267
   Profit (loss) from                 3,571,656        562,095      (26,639)       4,107,112    (3,085,259)      1,021,853
   operations
   Pretax Income (loss)               1,287,640      (172,278)      (31,045)       1,084,317       274,088       1,358,405
   Net interest income                  (6,854)         13,891         3,289          10,326       274,300         284,626
   Depreciation/amortization             95,229        440,321        21,522         557,072       464,463       1,021,535
</TABLE>







                                       12
<PAGE>



                     WARRANTECH CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Except for the historical  information  contained herein,  the matters discussed
below or  elsewhere  in this  report  on Form 10-Q may  contain  forward-looking
statements that involve risks and uncertainties  that could cause actual results
to differ materially from those contemplated by the forward-looking  statements.
The Company makes such  forward-looking  statements  under the provisions of the
"safe harbor" section of the Private  Securities  Litigation Reform Act of 1995.
Forward-looking statements reflect the Company's views and assumptions, based on
information  currently  available to management.  Such views and assumptions are
based on, among other things, the Company's operating and financial  performance
over recent  years and its  expectations  about its business for the current and
future fiscal years.  When used in this Quarterly Report on Form 10-Q, the words
"believes,"  "estimates,"  "plans,"  "expects,"  and  "anticipates"  and similar
expressions  as they relate to the  Company or its  management  are  intended to
identify forward-looking statements.

Although  the  Company   believes  that  the   expectations   reflected  in  the
forward-looking  statements  are  reasonable,  it can give no assurance that its
expectations  will prove to be correct.  These statements are subject to certain
risks,  uncertainties  and  assumptions,  including,  but not  limited  to,  (a)
prevailing  economic  conditions which may  significantly  deteriorate,  thereby
reducing the demand for the Company's products and services, (b) availability of
technical  support  personnel  or  increases  in the  rate of  turnover  of such
personnel,  resulting from increased  demand for such qualified  personnel,  (c)
changes in the terms or  availability  of insurance  coverage for the  Company's
programs,  (d) regulatory or legal changes affecting the Company's business, (e)
loss of business from, or significant  change in  relationships  with, any major
customer,  (f) the ability to  successfully  identify  and contract new business
opportunities, both domestically and internationally,  (g) the ability to secure
necessary capital for general operating or expansion  purposes,  (h) the adverse
outcomes of litigation,(i)  the non-payment of notes due from an officer and two
directors of the Company due in 2007,  (j) the inability of any of the insurance
companies which insure the service  contracts  marketed and  administered by the
Company to pay the claims  under the service  contracts,  (k) the  inability  of
Butler to pay the claims previously insured by Reliance,  (l) the termination of
extended credit terms being provided by the Company's current insurance company,
(m) the inability of the Company to collect the "Loan  Receivable" in the amount
of $11,140,833  by the end of the Company's  fiscal year, and (n) the outcome of
the review currently being conducted by the staff of the Securities and Exchange
Commission   ("SEC")  of  the  Company's   financial   statements   and  related
disclosures.  Should  one or more of these or any other  risks or  uncertainties
materialize  or  develop  in a manner  adverse  to the  Company,  or should  the
Company's underlying assumptions prove incorrect,  actual results of operations,
cash flows or the Company's  financial  condition may vary materially from those
anticipated,  estimated  or  expected  and there could be a  materially  adverse
effect on the Company's business.

SEC REVIEW OF THE COMPANY'S FILINGS

In March of 2003,  the Staff of the Division of  Corporation  Finance of the SEC
selected  certain of the Company's  periodic  reports for review,  including the
Annual  Report on Form 10-K for the  fiscal  year ended  March 31,  2002 and the
Quarterly  Reports on Form 10-Q for the periods  ended June 30, 2002,  September
30, 2002 and December 31, 2002.  The staff informed the Company that the purpose
of the  review  is to assist  the  Company  in its  compliance  with  applicable
disclosure  requirements and to enhance the overall  disclosure in the Company's
reports.

In the course of its review,  the staff requested  clarification  of some of the
Company's  disclosures  and items in its  financial  statements  and the Company
agreed to amend certain of them on a going-forward basis.

As a result of these  communications  with the SEC staff,  the  Company  amended
certain of its  disclosures  as reflected in its Annual Report filed on Form 10K
for the fiscal  year  ended  March 31,  2003.  The  Company  also  restated  its
financial  statements for prior periods to reflect certain changes in accounting
policy.  The cumulative  effect of the change to prior periods was a net benefit
of $1,721,184 to retained earnings.


                                       13
<PAGE>

The Company is still in discussions with the SEC staff on two remaining  complex
issues regarding the Company's accounting treatment of the obligations of Butler
Financial Solutions, L.L.C. ("Butler") to pay claims under the service contracts
administered   by  the  Company  and  the   recognition   of  revenue  from  the
administration of service contracts.

If  Warrantech  is  required  to change its  accounting  policies as a result of
certain of the issues  raised by the SEC staff,  such changes could result in an
adverse  change  in  the  presentation  of  its  past  financial  results  and a
corresponding  positive  change in future  results.  As a result of the comments
from the SEC staff,  the Audit Committee of the Company's Board of Directors has
retained a separate  independent  accounting  firm to review the  accounting and
disclosure  issues raised by the SEC staff in its comment  letters and report to
the Committee on its conclusions. The Company will respond to the staff's latest
comment  letter  after the Audit  Committee  receives  the final  report of this
accounting firm. Since the accounting  issues raised in the comment letters from
the SEC staff are still under review,  the  resolution of those issues and their
effect on the Company's financial statements is not known at this time.





                                       14
<PAGE>



RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                 GROSS REVENUES

                                                 FOR THE THREE MONTHS ENDED         FOR THE SIX MONTHS ENDED
                                                       SEPTEMBER 30,                      SEPTEMBER 30,
                                               -------------------------------     ----------------------------
                                                  2003              2002              2003             2002
                                               ------------     --------------     ------------    -------------
<S>                                            <C>                <C>              <C>              <C>
Automotive segment                             $29,739,829        $28,567,189      $58,023,231      $52,578,238
Consumer Products segment                       10,364,652          8,933,123       20,344,271       17,432,574
International segment                            2,649,533          1,321,018        4,561,380        2,513,815
Other                                             (409,176)          (113,039)        (500,603)        (166,152)
                                               ------------     --------------     ------------    -------------
     Total gross revenues                      $42,344,838        $38,708,291      $82,428,279      $72,358,475
                                               ============     ==============     ============    =============
</TABLE>

Gross  revenues for the three month period ended  September  30, 2003  increased
$3,636,547,  or 9%, over the same  period in 2002.  Gross  revenues  for the six
month period ended  September 30, 2003  increased  $10,069,804  or 14%, over the
same  period  in  2002.  The  Automotive  and  International  segments  reported
increased gross revenues of 4% and 101% respectively,  in the three month period
ended  September  30,  2003 over 2002 and 10% and 81%  respectively,  in the six
month  period.  The  Automotive  segment  increase in gross  revenues was due to
higher sales prices offsetting slightly lower volumes. The International segment
experienced  higher sales volumes in both Puerto Rico and in South America.  The
Consumer  Products  segment reported a 16% increase in gross revenues during the
three month and six month periods ended  September 30, 2003 compared to the same
periods in 2002,  as sales  increased  from its top  customers  and the Consumer
Products segment added new business.

<TABLE>
<CAPTION>
                         NET EARNED ADMINISTRATIVE FEES

                                               FOR THE THREE MONTHS ENDED         FOR THE SIX MONTHS ENDED
                                                     SEPTEMBER 30,                     SEPTEMBER 30,
                                              -----------------------------     -----------------------------
                                                 2003            2002               2003             2002
                                              -----------    --------------     -------------    -------------
<S>                                          <C>               <C>              <C>              <C>
Automotive segment                            $3,589,071        $5,549,271        $6,900,538     $10,558,403
Consumer Products segment                      4,143,072         3,741,217         8,026,927        7,103,063
International segment                          1,881,660           760,817         2,962,087        1,477,090
Other                                            (26,225)         (113,038)          153,383         (166,153)
                                              -----------    --------------     -------------    -------------
        Total net earned administrative fee   $9,587,578        $9,938,267       $18,042,935      $18,972,403
                                              ===========    ==============     =============    =============
</TABLE>


Net earned  administrative  fees are gross  revenues  less  directs  costs,  the
combined sum of net premiums,  commissions  and sales  allowances  plus or minus
deferred  revenue.  For  the  first  six  months  of  fiscal  2004,  net  earned
administrative   fees  were   $18,042,935,   compared  to  $18,972,403  for  the
corresponding  period last year. The reduction in net earned  administrative fee
for the three months and first six months  ended  September  30,  2003,  was due
primarily to lower margins and higher amounts of net deferred revenue recognized
last year.  During the three month period ended September 30, 2003, net deferred
revenue was $631,129  compared to $896,598 in the same period for 2002.  For the
six months  ended  September  30,  2003,  net  deferred  revenue was  $1,014,490
compared to $1,512,913 in the same period in the prior year.

The Automotive segment's net earned administrative fee was $3,589,071 during the
second quarter of 2004, a reduction of $1,960,200 from the $5,549,271 net earned
administrative  fee in the same quarter 2003. For the first six months of fiscal
2004,  Automotive segment net earned  administrative fee was $6,900,538 compared
to $10,558,403  during the same period in 2003.  Although the Automotive segment
had an  increase  in its  gross  revenue,  its  net  earned  administrative  fee
decreased  due to lower  margins  due to  product  mix and  lower  net  deferred
revenues recognized this period.

The net  earned  administrative  fee  for  the  Consumer  Products  segment  was
$4,143,072 in the second quarter of fiscal 2004,  compared to $3,741,217 for the
same quarter in the previous year. For the six-month  period of fiscal 2004, net
earned  administrative  fees for the Consumer  Products  segment were $8,026,927
compared to $7,103,063  in the same 2003 period.  The increase was due to higher
volumes from existing clients and new business.


                                       15
<PAGE>

Net  earned  administrative  fee  for the  International  segment  increased  to
$1,881,660 in the second quarter 2004, from $760,817 for the same quarter in the
prior year.  For the first six months of fiscal 2004,  International  net earned
administrative fees were $2,962,087,  up from $1,477,090 in the same period last
year. The increase in the International's net earned  administrative fee was the
result of increased volumes from existing clients, new business in South America
and increased market penetration in Puerto Rico.

<TABLE>
<CAPTION>
                                      SG&A

                                                 FOR THE THREE MONTHS ENDED         FOR THE SIX MONTHS ENDED
                                                        SEPTEMBER 30,                     SEPTEMBER 30,
                                                ------------------------------     ----------------------------
                                                   2003             2002              2003             2002
                                                -----------     --------------     ------------    -------------
<S>                                             <C>                <C>             <C>              <C>
Service, selling and general                    $8,024,878         $7,894,879      $15,530,728      $15,097,222
administrative
</TABLE>


Service,  selling and general and administrative  ("SG&A") for the quarter ended
September 30, 2003 increased  $129,999,  or 2%,  compared to the same quarter in
the prior year. For the six month period,  SG&A increased  $433,506  compared to
the prior year six month period.  Legal expenses decreased $573,110 and $756,575
for  the  three  month  and  six  month  periods   ended   September  30,  2003,
respectively,  compared to the same  periods in 2002,  primarily  because of the
decrease in litigation  expenses  related to several  lawsuits that were settled
during fiscal period 2003.  Employee costs were higher at $4,751,413  during the
three month period ended September 30, 2003, compared to $4,521,704 in the three
month period ended September 30, 2002, primarily due to annual salary increases.
For the six months  ended  September  30, 2003  employee  costs were  $9,295,906
compared to $8,901,988 for the same period in the prior year, also due to annual
salary  increases.  Rent  expense  increased  from  $328,976 for the three month
period  ended  September  30, 2002 to $520,256  for the three month period ended
September  30, 2003 and from  $755,998 to  $1,123,778  for the six month  period
ended  September 30, 2003,  reflecting  the Company's  move to its new corporate
headquarters  in  Bedford,  Texas.  Telephone  expenses  were  reduced  26%,  or
$220,863,  to $612,574 as  compared  to $833,437 in the six month  period  ended
September  30,  2002,  due to lower  negotiated  telephone  usage  rates and the
elimination of data transmission lines after the Company consolidated operations
into one building.

<TABLE>
<CAPTION>
                             PROVISION FOR BAD DEBTS

                                                  FOR THE THREE MONTHS ENDED        FOR THE SIX MONTHS ENDED
                                                        SEPTEMBER 30,                     SEPTEMBER 30,
                                                 -----------------------------     ----------------------------
                                                    2003            2002               2003            2002
                                                 -----------    --------------     -------------    ------------
<S>                                                <C>           <C>                 <C>             <C>
Provision for Bad Debts                            $165,000                 -          $260,000               -
</TABLE>

The Company  began  increasing  its  provision  for bad debts during fiscal year
2003, as it anticipated the  uncollectability  of certain  receivables  from its
Consumer Products segment.




                                       16
<PAGE>


<TABLE>
<CAPTION>
                          DEPRECIATION AND AMORTIZATION

                                                  FOR THE THREE MONTHS ENDED        FOR THE SIX MONTHS ENDED
                                                        SEPTEMBER 30,                     SEPTEMBER 30,
                                                 -----------------------------     ----------------------------
                                                    2003            2002               2003             2002
                                                 -----------    --------------     -------------    -------------
<S>                                                <C>             <C>               <C>              <C>
   Depreciation and amortization                   $892,283        $1,021,535        $1,820,973       $2,044,654
</TABLE>


Depreciation and amortization  expenses were reduced by $129,252, or 13%, during
three month period ended September 30, 2003 compared to the same period for 2002
and  $223,681  or 11% during  the six month  period  ended  September  30,  2003
compared  to the same  period  for  2002.  This  decrease  is the  result of the
Company's  assets maturing and the continued  reduction of capital  expenditures
for the past few years.

<TABLE>
<CAPTION>
                                  OTHER INCOME

                                       FOR THE THREE MONTHS ENDED            FOR THE YEARS ENDED
                                              SEPTEMBER 30,                     SEPTEMBER 30,
                                      ------------------------------     ----------------------------
                                         2003             2002              2003            2002
                                      -----------     --------------     ------------    ------------
<S>                                    <C>                <C>              <C>             <C>
Interest and dividend income            $560,618           $284,626         $810,001
                                                                                            $460,455
Interest expense                        (148,358)           (37,636)        (280,556)        (87,539)

Gain (loss) on sale of assets              2,999             (9,605)           2,976         (57,459)
Credit card usage rebate                  74,991            100,455          204,168         247,349
Miscellaneous income                     115,608              1,288          156,137           3,703
                                      -----------     --------------     ------------    ------------
      Total other income                $605,858           $336,552         $892,726        $566,509
                                      ===========     ==============     ============    ============
</TABLE>


Other  income  for three and six  months  ended  September  30,  2003  increased
compared to the three and six months ended  September 30, 2002.  Higher interest
income,  primarily  from the Butler  notes and loans  receivable  was  partially
offset by higher interest expense  incurred from the Company's  extended payment
terms for its  insurance  premium  payable.  Miscellaneous  income  was  higher,
resulting  from sub lease  rental  income  from the  Company's  former  building
location.

<TABLE>
<CAPTION>
                               INCOME TAX EXPENSE

                                                  FOR THE THREE MONTHS ENDED        FOR THE SIX MONTHS ENDED
                                                        SEPTEMBER 30,                     SEPTEMBER 30,
                                                 -----------------------------     ----------------------------
                                                    2003            2002               2003            2002
                                                 -----------    --------------     -------------    ------------
<S>                                               <C>              <C>               <C>             <C>
Income taxes expense                              $329,259         $467,880          $327,259        $794,151
</TABLE>



Income taxes expense decreased $466,892 for the six month period ended September
30, 2003  compared to the period ended  September  30, 2002,  primarily due to a
reduction  in  income  before  taxes  and a lower  effective  tax rate  From its
International segment.

LIQUIDITY AND FINANCIAL RESOURCES

During the six months ended  September 30, 2003,  the Company had a net decrease
in cash  and  cash  equivalents  of  $2,610,483,  which  was  primarily  used in
financing  activities  to fund the  Bulter  loan and notes  receivable.  Working
capital  was a negative  $2.0  million at  September  30,  2003,  compared  to a
negative $0.8 million at September 30, 2002, primarily due to an increase in the
loan to Butler. The Company believes that internally generated funds, collection
of the RWC loan  obligations  from Butler and the $3 million line of credit from
Great  American  Insurance  Company,  will be  sufficient to finance its current
operations  for at least the next twelve  months.  In  addition,  the Company is
aggressively pursuing new business both domestically and internationally to fund
future working capital.  The Company plans to continue to contain its SG&A costs
and utilize  technologies  for operational  efficiencies to further enhance both
its operating income and cash flows from operating activities.


                                       17
<PAGE>

The Company has ongoing  relationships  with equipment  financing  companies and
intends  to  continue   financing   certain  future   equipment   needs  through
lease/purchase   transactions.   The  total  amount   financed   through   these
transactions during the six months ended September 30, 2003 amounted to $427,073
compared to $69,873 during the six months ended September 30, 2002.

SIGNIFICANT EVENTS

On September  19, 2003,  the Company  announced  that the Board of Directors had
received a proposal  by its  founder  -- Mr.  Joel San  Antonio -- of taking the
company  private.  The Board of Directors has  appointed a special  committee of
independent  directors  to evaluate  Mr. San  Antonio's  proposal  and all other
alternatives which are in the best interest of the Company's  shareholders.  Mr.
San Antonio's proposal involves cashing out all minority shareholders at a price
of $1.65 per share by means of a reverse stock split. The proposal is subject to
securing  financing and does not address other details  concerning the Company's
capitalization.  The special  committee will consult with independent  financial
advisors and counsel in the course of its review. Any transaction  considered by
the Company will be subject,  among other things,  to the  determination  of the
fairness of the price,  full Board of  Director  approval  and,  if  applicable,
obtaining suitable financing.  There can be no assurance that a transaction will
occur, and, if any transaction occurs, what the exact structure or terms of such
transaction  would be. The  members of the special  committee  consist of Gordon
Paris and Lawrence Richenstein.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
the  disclosure  of  contingent  assets  and  liabilities  at the  dates  of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting periods. Note 1 to the Company's Consolidated Financial Statements
set forth in the "Item 8. - Financial Statements and Supplementary Data," in the
Company's  Annual  Report  on Form  10-K  for the year  ended  March  31,  2003,
describes  the  significant   accounting   policies  and  methods  used  in  the
preparation of the Consolidated  Financial Statements.  The following lists some
of the Company's critical accounting policies affected by judgments, assumptions
and estimates.

REVENUE RECOGNITION

Under SAB 101, the Company recognizes revenue when the revenue is realizable and
earned.  The Company  considers  revenue realized and earned when a definitively
discrete  earnings  event has  occurred.  The Company has two discrete  earnings
events (1) for marketing  and  administration  of service  contracts and (2) for
servicing fees. The marketing and  administrative fee is paid by the retailer of
the service contract.  This revenue is recognized at the time of the sale to the
retailer as the Company will have  substantially  completed  the services it has
agreed to provide in  connection  with the sale of the  service  contract to the
consumer.

The second  discrete  earnings  event occurs over the life of the  contract.  As
such, Warrantech recognizes and realizes the revenue over the contract life.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company  assesses  potential  impairment  of its  long-lived  assets,  which
include its property and  equipment  and its  identifiable  intangibles  such as
software development costs,  goodwill and deferred charges under the guidance of
SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived  Assets." Once
annually or as events or  circumstances  indicate that an asset may be impaired,
the Company assesses potential  impairment of its long-lived assets. The Company
determines  impairment by measuring the undiscounted  future cash flow generated
by the assets,  comparing the result to the assets' carrying value and adjusting
the assets to the lower of its carrying value or fair value and charging current
operations  for any measured  impairment.  At September  30, 2003 and 2002,  the
Company  found  no  impairment  to its  property  and  equipment  or  its  other
identifiable intangibles.




                                       18
<PAGE>



INCOME TAXES

Deferred tax assets and liabilities  are determined  using enacted tax rates for
the effects of net operating losses and temporary  differences  between the book
and tax  bases of assets  and  liabilities.  The  Company  records  a  valuation
allowance on deferred tax assets when appropriate to reflect the expected future
tax benefits to be realized. In determining the appropriate valuation allowance,
certain  judgments are made relating to  recoverability  of deferred tax assets,
use of tax loss  carryforwards,  level of  expected  future  taxable  income and
available tax planning  strategies.  These  judgments are routinely  reviewed by
management.  At  September  30,  2003,  the Company had  deferred  tax assets of
$2,751,675,  net of a valuation  allowance of $189,772.  For further discussion,
see Note 12 to the  Consolidated  Financial  Statements in the Company's  Annual
Report on Form 10-K for the year ended March 31, 2003.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September  30,  2003,  the Company did not have any  derivatives,  debt or
hedges  outstanding.  Therefore,  the Company  was not subject to interest  rate
risk.  In  addition,  the risk of foreign  currency  fluctuation  was and is not
material to the Company's financial position or results of operations.

Short-term  marketable  securities  and long-term  investments  are comprised of
municipal  bonds which bear interest at fixed rates.  Interest income from these
securities  is generally  affected by changes in the U.S.  interest  rates.  The
following tables provide information about the Company's  financial  instruments
that are sensitive to changes in interest  rates.  The tables present  principal
cash flows and  weighted-average  interest rates by expected maturity dates. All
of  the  investments   are  considered   "available  for  sale."  The  resultant
differences  between  amortized  cost and fair  value,  net of taxes,  have been
reflected as a separate component of accumulated other comprehensive income.

Principal  amounts by expected  maturity as of September  30, 2003 of marketable
securities are as follows:

<TABLE>
<CAPTION>
                                   Expected Maturity Date as of September 30,
                          ------------------------------------------------------------
                             2004       2005      2006      2007   2008   Thereafter   Total Cost  Fair Value
                             ----       ----      ----      ----   ----   ----------   ----------  ----------
<S>                        <C>         <C>        <C>                                    <C>        <C>
Available for sale
securities                 $1,877,933  $441,427   $119,980       -      -           -    $2,439,340 $2,439,340
       Interest rate            4.36%     4.82%      4.87%       -      -           -
</TABLE>




ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES
The Company's  Chief Executive  Officer (CEO) and Chief Financial  Officer (CFO)
are primarily  responsible for the accuracy of the financial information that is
presented in this  Quarterly  Report on Form 10-Q.  Each of them has,  within 90
days of the  filing  date of this  Quarterly  Report,  evaluated  the  Company's
disclosure controls and procedures, as defined in the rules of the SEC, and have
determined  that such controls and  procedures  were  effective in ensuring that
material information  relating to the Company and its consolidated  subsidiaries
was made known to them during the period covered by this Quarterly Report.

INTERNAL CONTROLS
To meet  their  responsibility  for  financial  reporting,  the CEO and CFO have
established  internal controls and procedures which they believe are adequate to
provide reasonable  assurance that the Company's assets are protected from loss.
These internal controls are reviewed by the Company's independent accountants to
support their audit work. In addition,  the Company's Audit Committee,  which is
composed entirely of outside directors,  meets regularly with management and the
independent  accountants to review  accounting,  auditing and financial matters.
This Committee and the independent  accountants  have free access to each other,
with or without management being present.

THERE WERE NO  SIGNIFICANT  CHANGES IN COMPANY'S  INTERNAL  CONTROLS OR IN OTHER
FACTORS THAT COULD SIGNIFICANTLY AFFECT INTERNAL CONTROLS SUBSEQUENT TO THE DATE
OF THE CEO'S AND CFO'S MOST RECENT EVALUATION.


                                       19
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.       Legal Proceedings

       LLOYD'S UNDERWRITERS
       Certain Underwriters at Lloyd's,  London and Other Reinsurers Subscribing
       to Reinsurance  Agreements  F96/2992/00 and No. F97/2992/00 v. Warrantech
       Corporation,  Warrantech  Consumer Product Services,  Inc. and Warrantech
       Help Desk, Inc.,  District Court of Tarrant County,  Texas, 17th Judicial
       District.

       During the period that Houston  General was the underwriter of certain of
       Warrantech's  programs,  it reinsured  certain of the underwritten  risks
       with one or more Lloyd's insurance syndicates.  At some point thereafter,
       Houston General commenced an arbitration  against the Lloyd's  syndicates
       seeking  to  recover  approximately  $46,000,000  under  the  reinsurance
       treaties  with respect to claims  previously  paid by Houston  General on
       warranty claims  submitted by customers under  Warrantech  programs.  The
       Warrantech  entities  were not  parties in the  arbitration  but were the
       subject of extensive discovery by each of Houston General and the Lloyd's
       syndicates.  The  arbitration  concluded  in August 2002 with an award of
       approximately $39,000,000 in favor of Houston General.

       The award supports the assertions of Houston  General with respect to the
       validity of the claims that it paid.  Warrantech  was not involved in the
       selection of these  re-insurers,  has no  contractual  relationship  with
       them, and has had no reporting or other obligation to them. Despite these
       facts,  the Lloyd's  syndicates  now seek to recover  some portion of the
       arbitration  award  from  the  Warrantech  entities  on two  theories  of
       liability.  The first is that, at the time certain  claims were presented
       to  Houston   General  for  payment,   the  Warrantech   entities  either
       fraudulently  or  negligently  represented  to Houston  General that such
       claims  were  valid.   The  second  is  that  the   Warrantech   entities
       intentionally  failed to comply with their legal obligations to cooperate
       with the parties  during the discovery  process for the  arbitration.  No
       specific demand for damages is contained in the complaint.

       Warrantech has filed a counterclaim  against  Lloyd's  arising out of the
       same set of facts  that  underlie  the  original  litigation.  Warrantech
       alleges  fraud,  unfair claim  settlement  practices and bad faith and is
       seeking damages of approximately  $46,000,000.  Warrantech is also asking
       that any damage award be trebled as permitted under applicable Texas law.

       The parties are presently engaged in extensive document discovery and, in
       particular, the review of electronic files and databases.

       Management  believes that this case is without merit;  however, it is not
       able to predict the outcome of this litigation.  The Company is unable at
       this time to determine the Company's potential liability,  if any, and as
       such, the accompanying  financial  statements do not reflect any estimate
       for losses.


Item 2.       Changes in Securities and Use of Proceeds

              Not applicable.

Item 3.       Defaults Upon Senior Securities

              Not applicable.

Item 4.       Submission of Matters to Vote of Security Holders

(a) On September 8, 2003, the Annual Meeting of the  Stockholders of the Company
was held in Bedford,  Texas for the purpose of electing a Board of Directors and
voting on the  proposal  described  below.  There were no  solicitations  in the
opposition  to  management's  nominees  for  director  as  listed  in the  proxy
statement.


                                       20
<PAGE>

         (c)  Each  of the  directors  nominated  by  the  Board  (which  number
constitutes  the entire Board of the Company) and listed in proxy  statement was
elected with the votes as follows:

                  NOMINEES                  VOTES FOR             VOTES WITHHELD
                  --------                  ---------             --------------

              Joel San Antonio              14,942,478                    88,599
              William Tweed                 14,943,018                    88,059
              Jeff J. White                 14,943,363                    87,714
              Lawrence Richenstein          14,942,918                    88,159
              Gordon A. Paris               14,943,263                    87,814
              Ronald Glime                  14,894,053                   137,024
              Richard Rodriguez             14,942,918                    88,159

              An amendment to the Company's 1998 Employee Incentive Stock Option
              Plan ("the  Plan"),  increasing  the maximum  aggregate  number of
              shares of Common  Stock which may be issued  upon the  exercise of
              options granted under the Plan from 1,641,987 to 2,641,987 shares,
              was  approved  with the  following  vote:  8,961,781  shares  for;
              533,701 shares against.

Item 5.       Other Information

              Not applicable.

Item 6.       Exhibits and Reports on Form 8-K

              (a)     Exhibits

                     4(a)   Amendment  No. 3, dated  September  8, 2003,  to the
                            1998  Employee  Incentive  Stock  Option Plan of the
                            Company, as amended and restated.

                     4(b)   Amendment  No. 3,  dated  October  7,  2003,  to the
                            Warrantech 401K plan.

                     10(a)  Employment  Agreement  dated July 9,  2003,  between
                            Warrantech Corporation and Christopher L. Ford.

                     10(b)  Employment  Agreement  dated  July 1,  2003  between
                            Warrantech Corporation and Joel San Antonio.

                     31.1   Certification of Chief Executive Officer pursuant to
                            Section 302 of Sarbanes-Oxley Act.

                     31.2   Certification of Chief Financial Officer pursuant to
                            Section 302 of Sarbanes-Oxley Act.

                     32.1   Certification of Chief Executive Officer pursuant to
                            18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                            Section 906 of Sarbanes-Oxley Act.

                     32.2   Certification of Chief Financial Officer pursuant to
                            18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                            Section 906 of Sarbanes-Oxley Act.



                                       21
<PAGE>






              (b)     Reports on Form 8-K

                      Current  Report  on  Form  8-K,  dated  August  11,  2003,
                      reporting,  under Item 9, the Company's  financial results
                      for the quarter ended June 30, 2003.

                      Current  Report on Form 8-K,  dated  September  19,  2003,
                      reporting,  under Item 5, Other Events', reported that the
                      Board of  Directors  received a proposal by its founder --
                      Mr. Joel San Antonio -- for taking the company private and
                      has appointed a special committee to evaluate the proposal
                      and all other  alternatives which are in the best interest
                      of the shareholders.



                                       22
<PAGE>




                                    SIGNATURE




         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                      WARRANTECH CORPORATION
                      --------------------------------------------------------
                        (Registrant)



                      /s/ Richard F. Gavino
                      --------------------------------------------------------
                       Richard F. Gavino - Executive Vice President, Chief
                       Financial Officer, Chief Accounting Officer and Treasurer
                       (Chief Financial Officer and Duly Authorized Officer)


Dated: November 7, 2003




                                       23